US Supreme Court upholds freedom-of-contract principle in antitrust class arbitration

By Kiera S Gans and Davide Rossetti

In the recent case of American Express co et al v Italian Colors Restaurant et al, the US Supreme Court addressed the validity of a contractual waiver to class arbitration where the cost of individually arbitrating a federal statutory antitrust claim made it cost-prohibitive to raise those claims independently rather than as part of a collective class. The court’s conclusion in favour of upholding the agreement can be seen as a further re-affirmation of the principles of freedom of contract.

An agreement between the petitioners, American Express and a subsidiary, and the respondents, merchants who accept American Express cards, required all of their disputes to be resolved by arbitration and prohibited arbitration on a class-action basis.

Nonetheless, the respondents filed a class action in federal court arguing that American Express and its subsidiary had used their monopoly power in the market to charge higher rates than those for competing credit cards in violation of federal antitrust (also called anti-competition) laws…

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